Michael Page hit as nervy clients put the brakes on

RECRUITMENT specialist Michael Page International, which struggled to market less than three months ago, today warned first-half profits would be no higher than last year's.

Shares in the company instantly fell below their 175p float price, sliding 11% to 168 1/2p.

Chief executive Terry Benson also said full-year profits were likely to be little changed from last year.

"Our brokers Credit Suisse First Boston are going for 78 million profits.

I am comfortable with that," he said.

Only last month, the company reported strong growth in the first quarter of the year, full-year profits were forecast at nearly 95 million and the shares peaked at 233 1/2p. Since then, however, there has been precipitate slowdown.

"We are 100% client-led and what is happening to us is a reflection of what is happening around us," said Benson. "We go out and pitch for business, we win the business and then the client rings up and either cancels the contract or defers it. There is so much uncertainty out there."

MPI operates globally but the majority of its business is in Britain and continental Europe.

"The US has been difficult from the beginning of the year and we were always cautious about Australia but problems have begun to develop in the UK and very recently there have been signs of change on the Continent," said Benson.

MPI was owned by US group Spherion until March this year and the intention was to sell the British-based company for at least 800 million.

The flotation suffered as investors said they were nervous about new issues in general and about Page's prospects in troubled economic circumstances.

Investment bank CSFB initially set a range for MPI shares of 190p to 250p, implying a total value of up to 938 million. In the event, the price had to be cut to 175p, valuing the company at 656.3 million.

Today it was capitalised at only 631 million and CSFB changed its recommendation on the shares from buy to hold.

MPI specialises in middle management recruitment. The company said Britain has seen a downturn in the IT and tele-coms sectors in particular.

Profits have been hit too because the company increased staff and IT spend last year, anticipating strong growth in 2001. There are no plans to cut the 3000 headcount.

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